Dividend REITs Got Walled in By Covid, but Here's One With Room to Grow

As the pandemic of the last 12 months has reminded us, there are many things -- good and bad -- that can happen to companies and their respective shares. That's why I periodically re-run some of the stock screens that I use to ferret out those dividend payers with compelling dividend yields as well as identify both new dividend payers and those payers that have recently increased their quarterly dividends. The sudden impact of the pandemic last year left many companies looking to conserve cash, particularly retail-facing ones, amid what was at the time a wall of uncertainty. That brings me to something my latest round of screening has turned up -- one-time dividend payers that cut their payments and have since reinstated them. Odds are we'll be talking through several of those in the coming weeks, and to kick it off let's begin with Brixmor Property Group . Background on Brixmor While not as commonly known as some other real estate investment trusts that focus on shopping centers, Brixmor does just that and as of Sept. 30, its portfolio had 395 shopping centers that represented roughly 69 million square feet of gross leasable area. Among its top tenants were TJX Companies , Kroger and Dollar Tree Store , with other retail partners such as Burlington Coat Stores, Publix, Ross Stores , Albertsons , Walmart and Kohl's Corp. . Given the pandemic that led retailers to shrink their footprint in 2020, Brixmor suspended its then quarterly dividend per share of $0.285 to preserve capital during a very uncertain time. That sent BRX shares tumbling in the first half of 2020, but they recovered during the second half of the year. Brixmor's financial results through the first nine months were down year-over-year, but not as bad as feared. Revenue for the first nine months of 2020 fell 10.5% year-over-year, but the company was still earnings-per-share positive during the period and its operations generated more than $323 million in cash flow during the first nine months of 2020. That left Brixmor with more than $611 million in cash and equivalents exiting the September quarter. Granted all of those metrics were down vs. the first nine months of 2020 but again they were not as bad as feared. Dividend, Yield Return Alongside those September-quarter results, Brixmor reinstated a smaller quarterly dividend of $0.215 per share, which, given the company's share count equates to a roughly $263 million on an annualized basis. For dividend yield hunting investors, that annualized $0.86 per share dividend offers a yield near 4.9% and it comes with ample cash and operating cash flow coverage. As the domestic economy progresses on the COVID-19 vaccine front, odds are the retail landscape will improve further, which should lead to a rebound in rent collections across the industry, but also a rebound in occupancy rates. For example, exiting the December quarter, mall-focused REIT Simon Property Group recently reported a pick-up in leasing property activity, that should lead to a rebound in its occupancy rate from 91% in the December quarter. The same is likely at other retail focused REIT operators, including Brixmor. With the vaccine rollout slated to take a few quarters, odds are Brixmor and other REITs like it won't see a quick rebound in occupancy rates back to 2019 levels, but the company should have ample fire power to meet its new dividend commitments. (WMT is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells this stock? Learn more now.)

Dividend REITs Got Walled in By Covid, but Here's One With Room to Grow

Brixmor Property Group should have ample fire power to meet its new dividend commitments as vaccines get rolled out.

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